Monthly Archives: November 2013

When former CEO Alex Spirikaitis was arrested on the afternoon of Monday, October 21, 2013, he had been on the run for three months, accused of embezzling more than $10 million from the $23.6 million Taupa Lithuanian Credit Union in Cleveland, Ohio.

He had changed his appearance by growing hair on his formerly shaved head and shaving his goatee. Despite speculation he had fled to Europe or South America, he was apprehended in the Collinwood neighborhood on Cleveland’s east side.

“He was actually walking down the street when they spotted him,” said FBI Special Agent Vicki Anderson. Although he had left behind multiple semi-automatic weapons and 10,000 rounds of ammunition stored at the credit union, he was arrested without incident. “He did not put up a fight.”

The FBI would not say how he been tracked to Collinwood, only that they had “developed information based upon advanced investigative techniques that led to his apprehension,” a brief statement said.

He was less than three miles from the shuttered Taupa Credit Union.

Modern credit unions date to mid-nineteenth century Germany, where they were conceived as ‘people’s banks’ leveraging social capital to serve farmers and the working class. The first credit union in North America began operations in 1901 with a ten-cent deposit. Today more than 8000 credit unions in the United States serve over 90 million members with total assets of nearly $800 billion.

Managed by their members, most credit unions are non-profit cooperatives taking in deposits, promoting thrift, and making loans. Unlike banks, individuals combine in them to manage and control their own money. Credit unions range from corporate to community institutions serving local schools and churches.

When Augis Dicevicius emigrated from Lithuania to Cleveland in the early 2000s, he opened an account at Taupa. “It was like loyalty,” he said, describing why he kept an account there. The employees at Taupa were from the immigrant community, spoke Lithuanian, and over time became more like friends than bankers.

“There is a level of trust from both sides of the counter at Taupa because you know who you are dealing with,” explained Algis Gudenas, former chairman of the credit union’s board of directors, three years before the National Credit Union Association liquidated it. “I think the slogan of Taupa more or less says it: save with one of your own.”

From the 1930s when the federal government began to charter them, credit unions grew steadily, especially among immigrant groups. They were instrumental in helping establish Poles, Germans, Italians, and the more recent Asian and Hispanic immigrants in their new homeland. When creating the Office of Ethnic Affairs in 1976 President Ford cited “the ethnic church, school, and credit union” as fostering “a sense of neighborhood.”

Wherever Lithuanians have settled they have formed their own credit unions, from coast to coast. Founded in 1969, the California Lithuanian Credit Union has assets of $72 million. The Boston Lithuanian Federal Credit Union celebrated its 33rd anniversary in 2013. From its roots in the basement of a hall in the early 1950s, Toronto’s Parama has grown to be the word’s largest Lithuanian credit union.

Already by 1906 in Cleveland the Lithuanian Building and Loan Association, sometimes known as the Lithuanians’ bank, had been established, even though the community numbered less than 1000 at the time. After World War II it evolved into Superior Savings and Loan. In the 1980s, when Cleveland was by then home to more than sixteen thousand Lithuanian Americans and their descendants, Taupa was founded and served the community for almost thirty years.

With approximately 1100 members and $24 million in assets, located a short walk from both their church and the Lithuanian Village cultural center, Taupa was stable, healthy, and growing, year after year, even in an economy often troubled by bank failures and recessions.

Until the evening of July 16th, when police and federal agents surrounded Alex Spirikaitis’s $1.7 million home in Solon, a bedroom suburb 25 miles southeast of Cleveland. It was four days after the decision had been made by the state to liquidate the credit union, determining it was insolvent and had no prospect for restoring viable operations.

Armed with a warrant for his arrest for fraud, when authorities approached the home they were met by his family, who told them he was inside, but refused to come out.

“Family members left the house with us and we thought, from the information we gathered, that he was not going to willingly come out,” said Special Agent Vicki Anderson.

The police decided to regroup, the size and layout of the large house playing a big part in their decision to wait for daylight.

After a nightlong standoff, the neighborhood cordoned off for safety’s sake, and TV news crews at the ready, tactical teams entered the house in the morning.

But, the police came up empty. He was not there.

Before the first members made their first deposits in 1984, the credit union was just a hope and a dream. “We were in our kitchen having coffee one morning, talking about it like we had for months,” recalled Angele Staskus, ”when my husband suddenly said that yes, we were going to go ahead.” Believing Cleveland’s Lithuanians would be better off banding together for their savings and loan needs, Vic Staskus took his brainchild to an ad hoc committee made up of Vytautas Maurutis, Vacys Steponis, Gintaras Tauras, and Vincas Urbaitis. Taupa was coined as its name and chartered by the state.

At a meeting at Our Lady of Perpetual Help church attended by fewer than twenty people, they collected $4000 in deposits, convinced local Lithuanian attorney Algis Sirvaitis to donate space for an office, and hired Rimute Nasvitiene, who became Taupa’s first employee.

“At first we did everything by hand,” said Vic Staskus. Later that year the Toronto credit union offered them their old computing machine. “It took four of us to bring it into our office, since it was as big as a table, and on top of that we lost most of our small space to it.” Fortunately, through a friend at IBM, they were soon able to secure a more modern system.

After they purchased their own building from a retiring Lithuanian doctor in 1985, deposits began to pour in. “That was a problem,” Vic Staskus recalled shortly before his death in January 2011. “We had no loans, so we were earning very little. We asked one of our board members to take out a loan. He said he didn’t need anything. Every time we asked him, he said no. But, we were finally able to convince him and he took a loan out for $500, and gradually people began to realize we were lending.”

By 1990, when Vic Staskus left Taupa, the credit union had nearly $8 million in assets and delivered most of the same services banks did. “I knew we could offer better rates and interest, and I always believed we could offer as many advantages as banks to our members,” he said.

Alex Spirikaitis joined Taupa in the early 1990s, at first working at the front counter as a clerk, later promoted to assistant manager, and eventually taking on the role of CEO, as the credit union quadrupled its assets in those years.

“He lived on the same street as we did, in the neighborhood, just down the street from the credit union, when we were children,” said Rita Zvirblis, who served as secretary for Taupa’s board of directors in its early years. “He was a really nice kid, really quiet.”

Former board director Ricardas Sirvinskas described Spirikaitis as well liked, especially by older members, because he spoke Lithuanian fluently. “The older generation of Lithuanians, they really liked Alex very much.”

After he was arrested, U.S. Magistrate Judge Kenneth McHargh unsealed an affidavit revealing the extent of the embezzlement, more than $10 million, making it one of the largest cases of fraud against a credit union in the country. The largest, recently involving St. Paul Croatian Credit Union, was coincidentally also in Cleveland, Ohio.

The criminal complaint against Alex Spirikaitis is for allegedly making false statements to a credit union from 2011 through 2013.

“He printed out numbers he wanted to report to auditors and the National Credit Union Association and taped them over the real numbers from the true Corporate One Federal Credit Union bank account statements,” the affidavit states. “Spirikaitis then photocopied the altered documents resulting in a document that mimicked the appearance of a statement coming directly from Corporate One.”

“Everybody accepted the financial statements Alex provided us, and everybody appeared to be happy with them,” said Vincas Urbaitis, a founding member of the credit union who sat on its board for more than 25 years until resigning in 2011. “I guess everybody just got duped.”

During the summer as Spirikaitis remained at large federal prosecutors seized his wife’s luxury SUVs and moved to take legal possession of his home. Court documents reveal that the down payment for the house, the construction of which took a year, was paid with two checks totaling $100,000 from Alex Spirikaitis’s personal account at the credit union.

“All remaining checks, totaling approximately $1,555,132, came from Spirikaitis in the form of Taupa Lithuanian Credit Union official checks,” court documents say. “While working at the Taupa Lithuanian Credit Union, Spirikaitis never made in excess of $50,000.”

The Adirondack-style house on a five-acre lot features two full kitchens, indoor swimming pool, entertainment room with big screen and movie projectors, five-and-a-half bathrooms, and an elevator. “No Trespassing” signs surround it.

“I don’t think anybody from the board of directors knew or anyone within the Lithuanian community knew he was building a house,” said Vincas Urbaitis. “He was not very social. But he was not antisocial. He would talk to you about the business aspects of the credit union, but I don’t even know who his close friends were.”

Ricardas Sirvinskas described Spirikaitis as a quiet person, keeping to himself, and only rarely attending social events in the Lithuanian community.

Although court documents are not completely clear regarding the final tally of money missing, Vincas Urbaitis asked why examiners had not verified the statements prepared by Spirikaitis.

“They never went to the bank, Corporate One, and asked independently as to how much money was in the accounts,” he said.

Vytautas Kliorys, board president of Taupa at the time it was closed and liquidated, also questioned the credit union’s third-party audit firm and examiners. “The board believed that it had all the procedures in place to prevent this sort of event,” he said. “We had received excellent and very good reports from the annual state exams, and we had even gone one step further than required and used an outside CPA firm to perform annual independent audits.”

Paul Hixon, VP of marketing at Corporate One, had no comment other than to say the National Credit Union Association was investigating. Officials said it would take up to six months to complete a full forensic account process.

The Lithuanian community reacted to Taupa’s closing with dismay. “For those in Cleveland that have been watching the news for the last few days know that the Lithuanian community in Cleveland has been in the spotlight,” said Regina Motiejunas-McCarthy, co-host of Siaurinis Krantas: Lithuanian Radio. “Not because of something good but because of a tragedy.”

The unexpected closure of the credit union affected all its members, freezing their accounts for a month-and-more, even though they were insured, as well as severely impacting several businesses, including the Lithuanian Community Center.

“Like many other businesses that have their accounts there, we are all scrambling to open new checking accounts with basically no liquid cash other than from sales over the weekend,” Ruta Degutis, president of the center, said when the credit union was closed.

“Alex assumed a public trust when he became CEO of Taupa, to help better the lives of others,” said one of the members. “It was not given to him as an opportunity to satisfy personal greed.” After 30 years Cleveland’s Lithuanian community had lost one of the pillars of its community.

After his arrest U.S. Magistrate Keneth McHargh found Alex Spirikaitis indigent and qualified for a court-appointed public defender. Since a “Go Bag” filled with blank identification cards, mobile phone cards, and stored value cards that could be used as cash had been found in Spirikaitis’s office, the magistrate also ruled he be held behind bars without bond. Assistant federal public defender Darin Thompson did not challenge the no-bond ruling. Spirikaitis agreed to waive his right to a detention hearing. The case was bound over to a federal grand jury.

Alex Spirikaitis left the U.S. District Court in downtown Cleveland as he had entered it, hands handcuffed behind his back, looking at no one in the crowded court.